Eni SPA has signed a deal divesting one of its units in Nigeria to Oando PLC, saying the move is part of efforts to refocus on more profitable assets.
The sale of Nigerian Agip Oil Co. Ltd. (NAOC), an onshore-focused oil and gas exploration and production (E&P) subsidiary of the Italian energy giant, is subject to regulatory approval, Eni said in a press release, not disclosing the value of the transaction with the Nigerian buyer.
Eni’s wholly-owned NAOC, which also produces electricity, holds a 20 percent operating stake in the OML 60, 61, 62 and 63 blocks. Oando also has a 20 percent interest while NNPC E&P Ltd. holds 60 percent. NAOC also operates exploration leases OPL 135 and 282 with 48 percent and 90 percent interests respectively.
NAOC is also a partner in the Okpai 1 and 2 power plants, which have a combined capacity of 960 megawatts.
Oando’s acquisition excludes NAOC’s five percent interest in the Shell Production Development Co. Joint Venture, which remains under Eni’s portfolio, the announcement said. Nigeria’s NNPC is the majority investor in the venture with a 55 percent interest while Shell PLC has 30 percent and TotalEnergies SE 10 percent.
In Nigeria, where Eni says it has been in operation since the 1960s, the company produced an average of 11 million barrels of oil and condensate and 62 billion cubic feet of gas in 2022, according to data on Eni’s website.
Focus on Offshore
Eni said it is now focusing on its operated offshore assets in the Western African country, though onshore assets in which it holds non-operated stakes remain under its portfolio.
“Following the transaction completion with Oando PLC, Eni will maintain its presence in Nigeria through Nigerian Agip Exploration and Agip Energy and Natural Resources, reiterating the company’s commitment to its employees health and safety, as well as to the environment”, the news release said.
Eni said the divestment is consistent with its 2023-26 strategic plan toward net zero emissions by 2050. “The Upstream will supplement the core organically led growth with inorganic high-grading activity, adding resources with incremental value while divesting resources that can offer greater value and opportunities to new owners”, it said in the news release.
The plan targets to grow upstream production by a three to four percent compounded annual growth rate before plateauing 2030, with the share of gas targeted to rise by 60 percent by the end of the decade.
Nigeria is not part of planned oil and gas investments in the plan, which prioritizes spending on areas of operation with high levels of equity participation. “During the plan Eni will approve a number of high quality FIDs including the A/E Structures in Libya, Hail & Ghasha and expansions of Lower Zakum in the UAE plus Ivory Coast, Kazakhstan, Angola and possible new activities in the Eastern Mediterranean”, stated the plan released February 23.
“At the same time, in 2023, Eni will start-up the first phases of Baleine in Ivory Coast and Congo LNG, start-ups in Egypt, UAE and Norway and the continuing development program in Algeria, while in 2024 there will be start-ups in Italy, Egypt, Ivory Coast Phase 2, Kazakhstan and Norway”.
“By 2026 the Company will have added around 800,000 boed [barrels of oil equivalent per day] from start-ups and rampups with high returns, short paybacks and leading unitary costs”, the plan added.
“Eni will invest EUR 2.1 billion [$2.25 billion] over the next 4-year period, targeting 2.2 billion barrels of oil equivalent at around $1.50/boe of exploration cost, targeting 60 percent of discoveries to be gas”, it said.